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John 45
Level 1

state taxes

We moved from California to Texas on 16 Feb 21. My wife retired from her CA company, but paid CA state income tax for the time she was working in CA. Then after we moved to Texas, she started working from home for the California company she used to work for. Texas has no state tax. Will she have to pay CA state income tax for the 1.5 months she was working in CA before we move to Texas. We might move back to CA before the end of this year, and she will be working for that same company. How many months does she have to work in CA to be required to pay CA state income tax, or will her time spent in TX eliminate the need to pay CA tax?

1 Best answer

Accepted Solutions
KochuK
Employee Tax Expert

state taxes

Hi John 45, good day!

You and spouse moved from CA to TX on 2/16/2021. So you are a part year CA resident and a part year TX resident. TX has no income tax.

 

The money earned during the 1.5 months in CA is reportable/taxable in CA part-year tax return. The time you spent in TX has no bearing on how CA taxes your income.

 

Until you move back from TX to CA (if it happens), during the time you spent in TX, you are a CA NONRESIDENT.

 

Nonresidents pay California income taxes on taxable California-source income. With respect to employees, the source of income from services compensated by W-2 wages is the location where the services are performed, not the location of employer.

 

Assume your wife works remotely, and does not set foot in CA during the time in TX, the income earned while in TX is not "California-source income"; therefore, not reportable in CA tax return.

 

FTB Pub 1031 2020 Guidelines for Determining Resident Status has all the details.

https://www.ftb.ca.gov/forms/2020/2020-1031-publication.pdf 

 

If you move back to CA later this year, the earning during this period also is reportable in CA part year tax return.

Hope this helps.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

View solution in original post

1 Reply
KochuK
Employee Tax Expert

state taxes

Hi John 45, good day!

You and spouse moved from CA to TX on 2/16/2021. So you are a part year CA resident and a part year TX resident. TX has no income tax.

 

The money earned during the 1.5 months in CA is reportable/taxable in CA part-year tax return. The time you spent in TX has no bearing on how CA taxes your income.

 

Until you move back from TX to CA (if it happens), during the time you spent in TX, you are a CA NONRESIDENT.

 

Nonresidents pay California income taxes on taxable California-source income. With respect to employees, the source of income from services compensated by W-2 wages is the location where the services are performed, not the location of employer.

 

Assume your wife works remotely, and does not set foot in CA during the time in TX, the income earned while in TX is not "California-source income"; therefore, not reportable in CA tax return.

 

FTB Pub 1031 2020 Guidelines for Determining Resident Status has all the details.

https://www.ftb.ca.gov/forms/2020/2020-1031-publication.pdf 

 

If you move back to CA later this year, the earning during this period also is reportable in CA part year tax return.

Hope this helps.

**Say "Thanks" by clicking the thumb icon in a post
**Mark the post that answers your question by clicking on "Mark as Best Answer"

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